Congressman Readies Prediction-Market Insider Trading Ban for Federal Officials
Representative Ritchie Torres (D-NY) is reportedly preparing legislation that would prohibit federal officials from trading on prediction markets when they possess nonpublic information. The Public Integrity in Financial Prediction Markets Act of 2026 comes after a controversial trade tied to Venezuelan President Nicolás Maduro raised fresh concerns about insider activity on platforms like Polymarket.
A newly created Polymarket account invested over $30,000 yesterday in Maduro’s exit. The US then took Maduro into custody overnight, and the trader profited $400,000 in less than 24 hours. Insider trading is not only allowed on prediction markets; it’s encouraged. https://t.co/EtZyW1IWTa pic.twitter.com/MzsU9kOU73
— Joe Pompliano (@JoePompliano) January 3, 2026
According to Punchbowl News founder Jake Sherman, the bill will bar federal elected officials, political appointees, and executive branch employees from buying and selling exchanging prediction market contracts linked to government policy or political outcomes when they have material nonpublic information obtained through their official duties.
$400K profit on Venezuela strike sparks legislative push
The legislative push follows scrutiny of a highly profitable wager on Polymarket. A newly created account reportedly placed roughly $32,000 on a contract predicting Maduro’s removal from power by Jan. 31, 2026. Just hours later, US forces reportedly captured the Venezuelan leader, sending the contract to settlement and generating profits of more than $400,000 for the trader.
The account showed little prior activity, with the Maduro-related trade accounting for the majority of its gains. Others dissected blockchain transactions and later found several digital wallets that earned more than $630,000 combined on similar bets placed at similar times. It’s important to point out that no evidence has confirmed insider involvement, and some have argued that the example is not obviously a case of insider trading.
In any case, the timing has intensified calls for stronger market integrity protections and surveillance over prediction platforms.
The pattern has raised questions before about whether prediction markets can effectively police insider activity, particularly when trades involve sensitive political or military information.
Existing rules may not be enough
Rival prediction market Kalshi said its internal rules already ban insiders or decision-makers from trading on material nonpublic information, but that did not prevent a politician from trading on his own race last year nor has it prevented insider accusations on pop culture-related markets, such as Spotify streams.
Today is the second day in a row that the Spotify daily market flipped almost immediately after the tracking window closed. Golden was trading in the low single digits and is now a heavy favorite. Pretty suspicious if it wins. pic.twitter.com/NTvi8KCORb
— Gaeten Dugas (@GaetenD) January 2, 2026
Torres’ proposal would adapt parts of the STOCK Act, which controls how members of Congress trade equities, to prediction markets. Supporters argue that without similar protections, these platforms might become tools for profiting from privileged information rather than aggregating the “wisdom of the crowd.” The congressman has previously commented in the fall of 2024, when he voiced his support for regulated election contracts.
While there is faction of prediction market proponents who view insider trading as a “feature” rather than a “bug,” legislation like Torres’ will only help build trust and spur mainstream adoption for these nascent financial platforms.